Immunodiagnostic Systems Holdings Plc

Immunodiagnostic Systems Holdings Plc (LON: IDH) is an FTSE AIM All-Share listed Medical Equipment Company, which supports the clinical laboratory market by developing and selling in-vitro diagnostics tests.

Investment Highlights - Immunodiagnostic Systems Holdings Plc – Speculative buy at GBX 180.00

• The Company has seen a significant recovery in revenue in the second quarter of the financial year 2021 and is focused on reducing costs.
• The Company has a strong liquidity position for H1 FY2021 with current ratio of 5.40x, which is higher than the industry median of 2.15x. The Company has strong liquidity position for last 5 years.
• As per valuation metrics, the EV/Sales and Price/Book Value multiples of the Immunodiagnostic Systems Holdings Plc are currently lower as compared to the corresponding multiples of the Healthcare Equipment & Supplies industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, 14-day RSI is in the oversold zone and is supporting an upside move (around 34 level), which means the stock price could increase in the short term.

Key Risks

• The Company’s revenue is impacted by increased competition in the healthcare sector.
• Global political uncertainty regarding the trade policy also poses a risk for the group, including protectionist measures and regulation or legislation in local markets.

Recent News

On 29 March 2021, Immunodiagnostic System Holdings announced that it has entered into an agreement with TGS (Technogenetics). As per the agreement, TGS will supply a fully automated IDS SARS-CoV-2 IgG test to IDS to run its iSYS analyzer for sales in the US market.

Financial Highlights – H1 FY2021 (30 September 2020) (released on 20 November 2020)

(Source: Interim Report, Company Website) 

• In the first half of the financial year 2021, due to the decrease in routine diagnostic testing levels, the unaudited revenue declined by 27% in H1 FY2021.
• Due to lower revenue and higher R&D costs, the profitability for the period declined. The Company reported a negative adjusted EBITDA of £750 thousand in H1 FY2021.
• The cash balance as on 30 September 2020 declined to £24,178 thousand (31 March 2020: £27,584 thousand).

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has shown a decline in financial performance in the first half of the financial year 2021. Both the revenue and the profitability for the period declined, with lower cash position. Despite the lower performance, IDH seen improvement in revenue trajectory in Q2 FY2021, as business recovered from the impact of covid-19. The Company believe the market to remain uncertain and might evolve, while remained confident on the position of the Company to return to growth as the global situation improves. The Company has a strong balance sheet position to tackle an uncertain period. The stock made a 52-week low and high of GBX 180.00 and GBX 420.00, respectively.

Based on the decent growth prospects we have given a “Speculative Buy” recommendation on Immunodiagnostic Systems Holdings Plc at the current price of GBX 180.00 (as on 12 April 2021 at 12:00 PM GMT).

OptiBiotix Health Plc

OptiBiotix Health Plc (LON: OPTI) is an AIM-listed life science company. It is involved in the development and research of microbiome modulators mainly in the United Kingdom.

Investment Highlights - OptiBiotix Health Plc – Speculative Buy at GBX 51.83

• The Company is progressing well with its strategy and is now focused on next phase of strategy, which will futher increase the revenue and profitability.
• In the last one year, the Company delivered a decent return of ~4.30% and delivered higher returns compared to the benchmark Index (FTSE-AIM Index).
• Over the course of 5 years (FY15 – FY20), the Company’s revenue surged from GBP 0.03 million in FY2015 to GBP 1.51 million in FY2020. Compounded annual growth rate (CAGR) stood at ~ 118.96%.
• From the technical standpoint, 14-day RSI is supporting an upside move (around 49 level), which means the stock price could increase in the short term.

Key Risks

• The Company’s revenue is impacted by increased competition in the healthcare sector.
• Due to the covid-19 crisis, the Company may face a shortage of supply of raw materials or product might not be able to reach customers.

Recent News

On 23 March 2021, OptiBiotix Health announced the selection of René Kamminga as CEO (Chief Executive Officer) of OptiBiotix Health’s subsidiary Company OptiBiotix Ltd.

Update on Commercial Strategy (released on 17 March 2021)

• The Company designed its strategy to build presence of brand, early sales of first generation functional ingredients WellBiome®, SlimBiome® and LPLDL® and network of global partners.
• The strategy will provide a base of a sustainable business along with profitability growth in functional fibre and probiotic divisions in FY2020.
• In the next phase of strategy, the Company is focused on scaling the first generation product sales for commercial use along with expansion of products and territories.

One Year Share Price Chart

(Source: Refinitiv, Thomson Reuters)

Conclusion

The Company has made significant progress in financial performance in the financial year 2020. OPTI has a scalable business model, which is helping in growing sales in multiple international territories in the human microbiome market. The Company is focused on securing deals with multiple partners across multiple geographic regions for rapid revenue growth and reducing the cost base. The Company is now focus on next phase of its strategy, which will help in business expansion and commercial rollout of products. OptiBiotix Health is well-positioned to capitalise by increasing the variety of products and applications. The stock made a 52-week low and high of GBX 42.20 and GBX 72.00, respectively.

Based on the decent prospects, we have given a “Speculative Buy” recommendation for OptiBiotix Health Plc at the current price of GBX 51.83 (as on 12 April 2021 at 8:22 AM GMT).

*Dividend Yield may vary as per the stock price movement.

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